28-year streak for Fidelity

Fidelity Life has kept its A- minus rating from AM Best - again.

Sunday, March 17th 2024, 4:10PM

AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Fidelity Life Assurance Company Limited (Fidelity Life Assurance) (New Zealand). The outlook of these Credit Ratings (ratings) is stable.

"The ratings reflect Fidelity Life’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management."

Fidelity Life chief financial officer Simon Pennington says the company has kept this level of rating for 28 consecutive years

“Life insurance is all about being there for our customers should the unexpected happen. This rating provides our customers, and their advisers, with an expert, independent view of our financial strength and ability to pay their claims,” he says.

The rating agency says Fidelity’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, which is at the strongest level as of fiscal year-end (30 June) 2023, as measured by Best’s Capital Adequacy Ratio (BCAR).

"The company has a robust capital management strategy that supports a solid regulatory solvency position, as well as the maintenance of risk-adjusted capitalisation at the strongest level over the medium term. AM Best also views Fidelity Life Assurance as having good financial flexibility, supported by its two largest shareholders, NZ Superannuation Fund and Ngāi Tahu Holdings Corporation Limited. A partially offsetting balance sheet strength factor is Fidelity Life Assurance’s high reliance on third-party reinsurance."

AM Best says Fidelity ’s operating performance is "adequate".

It has a five-year average return-on-equity ratio of 1.0% (fiscal years 2019-2023). Over the past two fiscal years, operating earnings were dampened due to elevated integration and transaction costs associated with the acquisition of Westpac Life.

"However, AM Best expects operating performance metrics to improve prospectively, supported by scale efficiencies arising from the group’s increased operational size, as well as enhanced technological capabilities."

Fidelity Life has recording significant premium growth following the acquisition of Fidelity Insurance (Westpac) in fiscal year 2022.

Tags: Fidelity Life